Everyone with a family has the same worries. How will they be cared for if something happens to you or your wage-earning partner?
The sad truth is too many just don’t know.
Research figures published on MoneyFacts.co.uk just last year revealed…
“44% of those with children aged 18 or under, and/or who are married and in a long-term relationship, don’t have any form of life insurance, a figure which rises to 72% when considering those without critical illness cover.”
The reality is that thousands of people are without any type of insurance and some are under-insured too. There may even be some who don’t have the right type of insurance.
The main myth is that insurance isn’t affordable. It is affordable, provided you do your research on providers, shop around, and most importantly, be realistic about what you really need.
Do you really need it?
Do I need life insurance has to be the most popular question asked. The simplest way to answer this is to think about who relies on you getting paid. Do you have children, dependent relatives, or a partner reliant on your income to pay the mortgage?
If your earnings support other people’s living costs then you need life insurance. If you get your wages paid and are free to splash every last penny of it any way you please without it affecting anyone, then you won’t need the cover. Chances are though, there’s someone in your life that would need financial support if you weren’t around. Even if that’s a distant relative who shows up at your door only when he or she needs something.
And also think about this… It’s not just for homeowners to make sure the mortgage gets paid. People who rent also need it to make sure the rent gets paid. You don’t need to own your home to insure your family.
How much should the policy cover?
The value of the policy should at least cover what’s left to be paid on the mortgage. If there’s no mortgage, the minimum should clear the debts.
Things to consider are:
Not to mention the rising cost of living.
The reality is that even with life insurance in place, money only goes so far. You can’t protect against everything, but you can think about where the money would need spent to determine how much cover you need.
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What type should I get?
There are only two common life insurance products, whole of life and term life. If it’s affordability you’re after, term cover is suited to more affordable life insurance quotes. Whole of life cover is pricier because it lasts until you die. With term life cover the idea is to have the policy cover your major debts for you.
There’s also decreasing term cover, which is more suited when your most pressing concern for insurance is to make sure the mortgage is paid, while getting the most affordable insurance premium. With a decreasing term policy, the monthly premiums and the payout decrease over the term of the policy.
Those are just for life insurance. It’s also smart to consider the family background of critical health conditions and other life-threatening conditions. If there’s a history of cancer, heart conditions, brain disorders, which would increase your care costs while decreasing your income due to not being able to work, then life insurance isn’t going to help you as that’s only payable upon the death of the policyholder. To insure against yourself becoming ill, there is critical illness cover available and if you’re more concerned about lost earnings, then income protection could be more suitable.